(4)

(3) Raise or borrow on the security of the deposited shares any money required for the purposes of the execution of the trust. Take all such actions and proceedings as they think expedient from time to time to protect the interests of the owners of the deposited shares." Then further on follows a provision stating the duration of the trust: "The trust shall be closed when one of the events following shall happen; that is to say: (1) When and so soon as the association by deed declare that it is to be closed; or (2) when the owners of three-fourths of the deposited shares of each class, by notice in writing to the association, declare the trust to be closed; or (3) when the last survivor of the now existing descendants of Her Majesty shall have been dead for twenty years; or (4) when fifty years from the execution hereof shall have elapsed." Then follows, among others, a provision giving the association power to make an assessment upon the owners of the shares to pay the expenses of the association.

After the formation of this trust and the execution of the deed poll, which was not, of course, recorded in any public place, copies thereof were printed in handsome style and sent out to some of the larger stockholders, and a circular letter was sent to all the stockholders, calling their attention to the formation of the trust and the deed poll, and that "a copy of the memorandum and articles of the association, and of the trust deed above referred to, may be inspected at the office of Messrs. Stokes Bros. & Pim, above mentioned, or at the office of Messrs. Morley, Shirreff & Co., 53 Gresham House, Old Broad Street, London, or copies of these documents can be obtained on application to them, and on payment of a fee of 1s. for each copy." That circular was the first notice, so far as appears, that any of the foreign shareholders had of the actual terms of the trust, and its terms were not brought to the notice of any of the complainants, except Warren, until some time later.

The result of this instrument, construed, as it must be, in connection with the articles of association of the association, was to vest in the individual defendants the absolute and irrevocable power for 50 years to control and manage the affairs of the Fisheries Company. They thereby have the right to name their own successors, and, by transferring a few shares to mere dummies having the necessary residential qualifications, may fill the board of directors with their mere creatures, destitute of the least pecuniary interest or responsibility in the corporation. This they have already done to the extent of two directors. I will stop here to say that a great part of the answer and affidavits is aimed at the peculiar position occupied by Mr. Warren as having been counsel for the Pim Committee and as having advised them from time to time in regard to the voting trust, and generally having occupied confidential relations

toward them; and it is charged that his conduct in going abroad, as he did, in the fall of 1902, and purchasing these association certificates from the foreign stockholders, and now filing this bill for the purpose of what is called "breaking the trust," is unprofessional and inequitable, and deprives him of any aid from a court of equity. I do not deem it at all necessary to go into the details of the proofs on this subject, and content myself with saying that I do not agree that the case shows anything that places Mr. Warren in the position of having been guilty of unprofessional conduct or a breach of professional confidence. The fact is that he was employed by the other complainants herein, and furnished with money to go abroad, in the fall of 1902, for the purpose of purchasing such a block of foreign stock as would give the American shareholders, if they all combined, a majority of the stock. It does not appear that in the course of such employment he made the least use of any informa- . tion which he obtained as confidential counsel of the defendants. He performed that task, and took title to the association certificates in his own name, and filed a bill in his own name. That was probably a mistake in practice, which might-I do not say wouldhave rendered his bill defective for want of parties, on the ground that the real parties in interest should have appeared on the record. But, whether a fatal defect or not, it was cured by the amendment which brought in the real persons, parties in interest, as complainants. Not one of them had any notice of the voting trust until long after it was formed, and not one of them had done any act of even simple acquiescence therein; much less have they done any act upon which any estoppel in favor of the defendants can be based.

This brings us to the merits of the real question in the case, and that is: (1) Have the American stockholders, by virtue of their ownership of stock, to which they originally subscribed, or purchased from original subscribers, standing in their names on the books of the company, a standing in this court to complain of the exercise of the right of the Pim Committee or the association to vote upon the shares held by them in trust, irrespective of the wishes of the cestuis que trustent? (2) Have the complainants, as owners of the equitable title of a certain number of shares, the title to which stands in the name of the Pim Committee on the books of the corporation, the right, as assignees of the original holders of certificates of deposited shares, to revoke the consent given by those original holders to the Pim Committee to form the voting trust, and to be accorded by this court the right to control the vote on those shares?

In the first place, it is proper to observe that it was quite natural and proper, and entirely lawful, that the foreign stockholders, who were numerous, should combine to en

able themselves to vote upon their stock at any meeting of stockholders in the far-away state of New Jersey. That combination might be either by a proxy or by the formation of a voting trust. In principle I see little difference between the giving of a proxy to vote and the transfer of shares of stock to a trustee to vote in person or by proxy. The principle is the same. In either case the holder of the stock is exercising his right to have his voice heard in the way provided by law in the management of the corporation in which he is a stockholder. So far, the circular letter of June 1, 1900, addressed to the stockholders by the Pim Committee, suggests nothing illegal or improper. Whether the further object mentioned in that letter, viz., that the foreign stockholders should by combination control the new company, was lawful is another question. And, as before remarked, nothing in that letter suggests that the creating of the voting trust would or .could stifle the voice of the equitable owner, and prevent him from directing the legal owner as to how he should vote on his stock. Nor did it suggest that, by consenting to the creating of the voting trust, the equitable owner deprived himself of the right to revoke the trust at his pleasure. The consent paper was, as we have seen, prepared by the committee, and was presented to the stockholder, and his signature demanded within a period so short as to well-nigh preclude proper consideration on his part as to its practical working and effect; and such presentation was accompanied with a threat that, unless immediately signed, the helpless stockholder would lose his all. Under such circumstances, the court should construe it most strongly against the donee of the power, and, so far as possible, avoid drawing any inferences unfavorable to the original and natural rights of the donor.

It is next to be observed that no consideration whatever was paid, directly or indirectly, by the Pim Committee or trustee to the owner for his consent to the voting trust. It was a purely voluntary creation of power. The transaction did not even contain the element of mutual promise, such as has arisen and been dealt with by the courts, where several persons have united, and by agreement have purchased in their joint name, and out of the aggregate of their individual means, a block of shares of stock, upon the agreement and understanding between them that they were to be held as a solid block, and voted as a majority of the pool should determine. There a consideration (whether a sufficient consideration or not has been considered a debatable question) is found in the mutual contribution of funds to the joint purchase, and the mutual promise to act in concert as a majority of the contracting parties should determine. I repeat, there is no such element found in the present

case.

Again, it is to be observed that the length

of time the trust was to continue was not mentioned in the circular letter of June 1st, or in the acceptance thereof signed by the depositing stockholder. There was nothing to lead the stockholder to believe or infer that the deputation of the right to vote was to be perpetual, or substantially so; and so the question at once would arise, what would be the reasonable construction to put upon such consent or deputation? By our statute the time to which an ordinary proxy is limited is three years, and even then the proxy is revocable at the pleasure of the donor. That I conceive to be a statutory declaration of policy on that subject. Be that as it may, I find nothing in the documents just mentioned to authorize or warrant the assumption of the power by the members of the Pim Committee, after organizing the corporation in question, which of itself was innocent enough, to convey to that corporation all the shares of stock held by them, and to annex to them a power of voting for 50 years, without regard to the wishes of the individual owners, or even a bare majority of them, and without allowing to them the power of revocation, except by the owners of three-fourths of the shares deposited.

It follows that the signing of the consent to the formation of the voting trust amounts to no more than the appointment of the holder of the legal title as the agent of the equitable owner, with power only to vote upon the stock as he (the equitable owner) should direct, and, in the absence of special direction, as the agent should see fit, and subject to the duty to vest the legal title in the equitable owner whenever demanded. It gave the legal owner no interest whatever in the stock, or any other power over it.

It is, however, alleged, and is a part of the defense, that the certificate holders who transferred their certificates to the complainant had notice and knowledge of the deed poll and the terms thereof, and acquiesced therein, long before they transferred the certificates to the complainants. There is some conflict in the proofs on this subject; but I shall assume that for the present purposes the weight of the evidence is that such certificate holders did acquiesce in the deed poll, in so far that they did not protest against it, and did not take any legal measures to revoke or set the same aside, or otherwise disturb its force and effect. Granting all that, I am unable to see how it varies the position of the parties. Such acquiescence, and failure to protest and take legal measures, cannot injure the equitable standing of the shareholder, unless the defendants have acted thereon in such manner that they cannot be restored to their original position, or, in other words, unless there are some facts raising an estoppel, such as existed in the case of Chapman v. Bates, above cited. The defendants have expended no money except what they have been reimbursed. They have entered into no obligations. They will suffer

may, by powers of attorney, or the creation of a trust, or the conveyance to a trustee of their stock, so combine or pool their stock as to provide for the carrying out of the plan so determined upon. But if stockholders combine by either mode to intrust and confide to others the formulation and execution of a plan for the management of the affairs of the corporation, and exclude themselves, by acts made and attempted to be made irrevocable for a fixed period, from the exercise of judgment thereon, or if they reserve to themselves any benefit to be derived from such a plan to the exclusion of other stockholders who do not come into the combination, then in my judgment such combination and the acts done to effectuate it, are contrary to public policy, and other stockholders have a right to the interposition of a court of equity to prevent its being put into operation." The words I have italicized apply to the present case, except that the majority stockholders in this case have not even formulated a plan for the management of the affairs of the corporation, but have left that entirely to others, and have excluded themselves from the management, and have attempted to make their action in that respect irrevocable for a fixed period, and so to exclude themselves from the exercise of their judgment on the affairs of the corporation, or, rather, the defendants the Pim Committee have assumed, without authority of the stockholders, to place the stockholders in that position.

But let us look at the circumstances of the present case from a purely practical point of view. The Fisheries Company is a corporation of the state of New Jersey, doing business wholly upon the coast of the United States. Its nominal headquarters is in New Jersey. The principal location of its business is Tiverton, R. I., where it has a factory for extracting the oil from fish which it catches, and converting the residue into fertilizers. The American stockholders protected their rights in the old company by taking stock in the new company upon the express pledge that they should stand on an equal footing with the foreign stockholders. Such were the terms of the plan of reorganization previously referred to, and under which the new company was actually organized. They knew that the majority of the stock was held abroad, and that the management of the company was subject to the criticism of the foreign stockholders. So far, then, as any questions might arise as to the management of the company, it was of the utmost importance to the American stockholders that the merits of the management should be subjected to the test of the judgment of all the stockholders. The first set of directors, by common consent, were constituted entirely of citizens of the United States, and as a matter of practice that must continue to be so. Hence those directors and the American stockholders who may have voted for them had a peculiar right in

this case to depend upon submitting the propriety of their management to the individual judgments of the foreign stockholders. They had a right to rely upon the law as settled by the courts of this state to protect them therein. They might reach those foreign stockholders, either by personal interview or by circulars discussing the condition and management of the affairs of the corporation, and they had the right by that law to have the judgment thereon of those individual stockholders, freely and fairly exercised in the votes which they might cast for directors at the annual elections. Instead of that, they find all the foreign stock pooled in the hands of seven men, who exercise complete control over the affairs of the company, and have the right to perpetuate themselves for 50 years by their power of reappointment, and they cannot be dislodged from their position without the concurrence of 75 per cent. of that stock which is controlled by the pool. As that amounts to about three-fifths of the whole, it reduces the amount necessary to maintain the Pim Committee and their associates in power to one-quarter of two-fifths, which is about one-seventh of all the stockholders. Now, it seems to me that the American stockholders, who are registered as such, have a right to complain of that state of affairs. It deprives them of the benefit of the judgment of about one-half of the stockholders of the company, and, as before remarked, brings the case far within the ruling and decision of the chancellor in the case of Kreissl v. Distilling Co. of America.

I have looked at some of the cases adjudged by the courts of other states and relied upon by the defendants' counsel. Many of them are cited by the Supreme Court of California in Smith v. San Francisco & North Pacific Railway Company, 115 Cal. 584, 47 Pac. 582, also reported in 35 L. R. A. 309, 56 Am. St. Rep. 119. In that case the decision of the court below was reversed by the Court of Appeals, with the Chief Justice dissenting, so that the decision is a result of a divided court. So far as it applies here, it was an affirmation of the doctrine that where three men unite, and provide funds to purchase a block of stock, and agree that the stock shall be voted as they, or a majority of them, shall determine, the mutual promise is a consideration for the contract, But a careful consideration of the learned opinion in that case shows that the present case is excepted. At page 317, 35 L. R. A. (first column), the learned judge says this: "The question has been presented in cases of voting trusts, but an examination of these cases will show that the question has arisen either when the authority was expressly given to carry out some illegal purpose, or when, having been given without any consideration, though purporting to be for a definite term, subsequent owners of the stock have sought to revoke it before the